A Study On Cash Management at Salzer Electronics Limited

International Journal of Humanities Social Science and Management (IJHSSM)
Volume 3, Issue 2, Mar.-Apr. 2023, pp: 973-986 www.ijhssm.org
A Study on Cash Management at Salzer Electronics

Limited
Mr SIDHARTH V1 Dr IYYAPPAN.K2
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Date of Submission: 07-04-2023 Date of Acceptance: 21-04-2023
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ABSTRACT an industry for highly qualified graduates. since the

Cash management plays a vital role in the success creation of the planet.
of any industry, including the electronics industry. All programme participant's projects are
In this industry, companies deal with high operating unique and catered to their requirements and
costs, fluctuating demand, and intense competition. interests. Students should actively participate in the
Effective cash management can help companies to process of identifying appropriate internships as
maintain a positive cash flow, reduce financial part of their internship experience.
risks, and improve profitability. The electronics
industry comprises various sub-sectors such as II. OBJECTIVE OF THE STUDY
consumer electronics, semiconductors, telecom, and  To Investigate cash management
electronic components, all with different challenges techniques and the impact on the income statements.
in cash management. Each sub-sector requires a  To Evaluate the effectiveness of the cash
unique approach towards cash management as they management of the SEL.
have distinctive cash generation and management  To Evaluate the cash flow of the
mechanisms. Cash collection, liquidity industry.
management, and forecasting are the essential
components of cash management in the electronics
 To Identify revenue and payments for
the industry.
industry. Companies need to optimize their credit
management and collection processes by closely  To Determine the link between bond
monitoring accounts receivable, which can help to management and profitability.
reduce the time of receivables, improve the cash
flow cycle, and reduce the possibility of bad debts. III. RESEARCH METHODOLOGY
In addition, companies in the electronics industry RESEARCH DESIGN
need to manage their liquidity correctly by ensuring Data collection is done with the aid of data from the
that cash reserves are available to meet operational company's financial management and information
and investment requirements. Proper forecasting of from
cash requirements will help organizations to cash management, a financial management tool.
maintain sufficient liquidity, avoid costly delays, and
effectively manage working capital
KEYWORDS: Positive cash flow, Cash
collection, liquidity management, and forecasting
I. INTRODUCTION
The project programme was created to
provide students with the chance to share their
knowledge, investigate the link between academic
preparation and field learning, and assist people
working in development. and the program's
implementation. An extensive study that
compliments my project-related experience. The six-
week project had a dual purpose by giving students
between their third and fourth semesters of the MBA
programme a critical business perspective as well as
| Impact Factor value 7.52 | ISO 9001: 2008 Certified Journal Page 973
LIMITATION OF RESEARCH services or goods should lead to this as the desired

This study contains a number of restrictions: outcome. The business must have just enough
1. Just five years' worth of data are gathered. funding, nothing more. The company's
2. Most financial information is kept private. manufacturing activities will be hampered by a lack
3. The time frame is set at six weeks. of liquidity, and an abundance of liquidity will just sit
4. The management forbade researchers from idle. without enhancing Hue's financial success. As
working in each department. a result, the financial manager's primary
responsibility is to maintain a positive cash flow.
IV. REVIEW OF LITERATURE Waltson and Head (2007) Optimizing free cash
Money is an exchangeable medium, flow, maximising interest earned on reserve funds
according to Davidson et al (1999). It has to be not immediately needed, and minimising late
unrestricted for business uses. Cash must satisfy the transfer losses are all concepts covered under cash
two primary conditions of being accepted and management.
readily available for use when making purchases or
paying obligations. Common tests that apply to cash V. DATA ANALYSIS AND
things include bank deposits. Planning, controlling, INTERPRETATION
and calculating cash transactions and cash balances Cash Ratio
are done in this manner. By transforming available The ratio of the company's short-term obligations to
funds into expenses directly or indirectly, we cash and cash equivalents is known as the cash
increase productivity. ratio. Although it solely compares cash and cash
Pandey, (2007) A crucial current asset for equivalents with current obligations, this liquidity
business operations is cash. The primary source of ratio is quite high. the following is a measure only.
information required for the efficient operation of
your organisation is money. Selling the company's
CASH RATIO = CASH/CURRENT LIABILITY*100

TABLE SHOWING CASH RATIO
Year Cash Current Liability Cash Ratio
2017-18 199.47 23,655.68 0.84%
2018-19 712.92 25398.64 2.81%
2019-20 221.82 26,052.43 2.80%
2020-21 493.33 30790.73 1.60%
2021-22 190.21 36153.51 0.53%
Figure: 1Graph showing the Cash Ratio in financial years 2017-18 to 2021-22
CASH RATIO
Cash Ratio
2.81% 2.80%
1.60%
0.84%
0.53%
2 0 1 7 - 18 2 0 1 8 - 19 2 0 1 9 - 20 2 0 2 0 - 21 2 0 2 1 - 22
Analysis and Inference

As seen in the aforementioned graphic, the liquidity ratio for 2017–18 was 0.84%. 2.81% in 2018-19,2019-20
2.80%, In 2020–21, it dropped to 1.60 percent. 2021–2022 will have an annual change of 0.53%. At 0.53%, the
cash ratio in 2022 is quite low.
CASH TO WORKING CAPITAL

The cash generating capital ratio measures the extent to which current liabilities can be hedged using cash and
cash equivalents and current assets such as securities. This includes situations in which the company does not
spend too much money on inventory and moves quickly to sales.
CASH TO WORKING CAPITAL = Cash and Cash Equivalents / Total Current Assets — Total Current
Liabilities
Working capital = Current Assets - Current Liability
TABLE SHOWING CASH TO WORKING CAPITAL
Year Cash Working Capital Ratio
2017-18 199.47 9,103.99 0.02%
2018-19 712.92 9,570.46 0.07%
2019-20 221.82 9,189.13 0.02%
2020-21 493.33 10618.34 0.05%
2021-22 190.21 13629.69 0.01%
Figure: 2 Graph showing the cash and working capital relation in financial years 2017-18 to 2021-22
Cash to Working Capital

Cash Working Capital
14000
12000
10000
8000
6000
4000
2000
0
2017-18 2018-19 2019-20 2020-21 2021-22

According to the graph above, the ratio of cash to working capital was 0.02% in 2017–2018 and 0.07% in
2018–2019. 0.02% in 2019-2020. It dropped to 0.01 in 2021–2022.
Figure: 3 The following graph shows the ratio of cash and working capital
Cash to Working Capital Ratio

0.08%
0.07%
0.06%
0.05%
0.04%
0.03%
0.02%
0.01%
0.00%
2017-18 2018-19 2019-20 2020-21 2021-22
Cash to Working Capital Ratio
Debt Equity Ratio
Debt Equity Ratio = Total Liabilities / Shareholders Funds
Table showing Debt Equity Ratio
Year Total Liabilities Shareholders’ Debt Equity Ratio

Funds
2017-18 53,723.18 27,060.09 1.98%
2018-19 56,556.38 28,699.45 1.97%
2019-20 60675.70 30,937.99 1.96%
2020-21 67422.57 33,128.65 2.03%
2021-22 75233.24 35,838.03 2.10%
Figure: 4 Graph showing the cash and Debt equity ratio min financial years 2017-18 to 2021- 22.
Debt equity ratio

2.15%
2.10%
2.05%
2.00%
1.95%
1.90%
1.85%
2017-18 2018-19 2019-20 2020-21 2021-22
Debt equity ratio

The debt-to-equity ratio for Salzer Electronics Industries is 1.98% in 2017–18, 1.97% in 2018–19,
1.96% in 2019–20, 2.03% in 2020–21, and 2.10% in 2022. The graph clearly shows that SEIL's debt equity
turnover ratio is rising. As SEIL's debt equity ratio is rising, the firm must worry about its high debt ratio in
order to satisfy its fixed commitments and is also dependent on shareholders and outsiders.
Growth of Cash Position
Table Showing Growth of Cash Position

Year Amount Growth rate in (%)
2017-18 199.47 100
2018-19 712.92 357.41
2019-20 221.82 111.20
2020-21 493.33 247.32
2021-22 190.21 95.36
Figure: 5 Graph depicting the Cash situation during the fiscal years 2017–18 to 2021–22.
Cash position
400
350
300
250
200
150
100
50
0
2017-18 2018-19 2019-20 2020-21 2021-22
Cash position
Figure: 6 Graph depicting the growth in cash position from the 2017–18 to the 2021–22 fiscal years.
Growth of Cash position

400
350
300
250
200
150
100
50
0
2017-18 2018-19 2019-20 2020-21 2021-22
Growth of Cash position

As seen in the aforementioned graph and chart, higher cash holdings tend to raise estimates for 2017–
18 as opposed to 2019–20. 2018–19 had an increase in growth rate to 357.41. Also, the growth in cash is
advantageous for the business in 2020–21, it may be argued. Nevertheless, it goes down in 2021–22.
CASH TO CURRENT ASSETS

The cash rate is the percentage of all current assets, which includes the company's securities, cash and cash
equivalents, and the most recent assets.
The present value of the securities and cash divided by the company's current obligations is the cash-to-cash
ratio. The quantity of highly liquid assets (such cash and securities) to the amount of current obligations are
compared using cash ratios, also known as cash ratios.
Cash to Current Assets = Cash/Current Assets*100
Table showing Cash to Current Assets

Year Cash Current Asset Ratio
2017-18 199.47 32,759.67 0.61%
2018-19 712.92 34,969.10 2.04%
2019-20 221.82 35,241.56 0.63%
2020-21 493.33 41,409.07 1.19%
2021-22 190.21 49,783.20 0.38%
Figure: 7 A graph displaying the Cash from the fiscal years 2017–2018 through 2021–2022.
Cash
800
700
600
500
400
300
200
100
0
2017-18 2018-19 2019-20 2020-21 2021-22
Cash

According to the aforementioned graph, the ratio of liquid assets to liquid assets was 0.61 in 2017–18,
2.04 in 2018–19, but it fell to 0.63 in 2019–20 before increasing to 1.19 in 2020–21. The information above
demonstrates how the company's cash to present ratio changes over time. As compared to 2018, 2019, 2020,
and 2021, the figure for 2021–22 is 0.38%, which is quite low.
Figure: 8 Graph depicting the current asset from the 2017–18 to the 2021–22 fiscal years.
Current Asset
60,000.00
50,000.00
40,000.00
30,000.00
20,000.00
10,000.00
0.00
2017-18 2018-19 2019-20 2020-21 2021-22
Current Asset
Figure: 9 Graph depicting the Cash to Current Asset Ratio from the 2017–18 through the 2021–22
financial years.
Cash to current asset Ratio

2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2017-18 2018-19 2019-20 2020-21 2021-22
Cash to current asset Ratio
NET PROFIT RATIO
Net income ratio = Net income after net sales / Net sales * 100
Table showing Net sales to Net profit ratio
Year Net Profit After Net Sales Net Profit Ratio

Tax
2017-18 2,001.65 45,333.17 4.41%
2018-19 2,395.74 55,976.62 4.28%
2019-20 2,638.66 56,694.56 4.65%
2020-21 2,067.35 60,561.95 3.41%
2021-22 2,420.46 80,354.15 3.01%
Figure: 10 Graph depicting the Net Profit Ratio from 2017–18 through 2021–22.
Net Profit Ratio

5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2017-18 2018-19 2019-20 2020-21 2021-22
Net Profit Ratio

From the graph, it is clear that Salzer electronics industries' net profit ratio will increase to 4.65 in
2019–20 from its previous value of 4.41 for the fiscal years 2017–18, 2018–19, and net profit of $2,395.74 and
4.28, respectively and fell in 2021 and 2022. The Salzer electronics industries' declining net profit ratio
reveals that the business's profitability position is flexible.
Cash Flow Statement

Particular 2022 2021 2020 2019 2018
A. CASH FLOW FROM
OPERATING ACTIVITIES
Profit/(Loss) after tax 2,450.58 2,210.67 2,546.83 2,377.35 1,956.58
Tax expenses 820.15 671.15 377.50 835.10 1,092.21
Depreciation and Amortisation 1,633.48 1,560.55 1,443.96 1,215.96 1,053.61
Interest Income -50.05 -34.18 -50.93 -43.42 -80.44
Finance Costs 1,987.65 2,127.42 2,116.68 1,988.47 1,491.25
(Gain)/Loss on Foreign Exchange -83.99 30.83 -11.93 73.59 -194.22
Fluctuations (Net)
Dividend Income -6.74 -25.42 -18.29 -12.60 -18.21
(Profit)/Loss on Sale of Investments -43.52 -10.93 15.00 -0.32 -2.90
(Profit)/Loss on Sale of Assets (Net) -3.13 -1.57 - -0.45 7.23
Fair valuation of investments -18.99 -144.43 93.80 - -5.23
Other Comprehensive Income -19.61 -47.10 28.92 - -
Other Non-operating Income - -126.79 -22.59 -13.91 -14.47
Operating Profit before working 6,665.83 6,210.20 6,518.95 6,419.77 5,285.41

capital changes
Adjusted for working capital
changes
Inventories -4,599.21 -2,022.06 -1,448.94 -412.43 -4,516.60
Trade and Other receivables -1,818.16 -4,144.12 511.79 -1,200.78 -1,732.54
Trade and Other Payables 936.59 1,865.13 -1,392.65 957.81 2,185.67
Other Liabilities -1,433.70 -25.85 -49.79 - -
Cash Generated from Operations -248.65 1,883.30 4,139.36 5,764.37 1,221.93
Direct Taxes Paid -975.01 -486.91 -583.96 -598.03 -806.65
Net Cash Flow from Operating -1,223.66 1,396.39 3,555.40 5,166.34 415.29
Activities ........... A
B. CASH FLOW FROM
INVESTING ACTIVITIES
Investment in Fixed Assets-Net -1,955.51 - - - -
Purchase of Fixed Assets - -1,974.82 -3,856.00 -2,880.38 -3,805.51
Sale of Fixed Assets 35.59 - - - -
Non-operating Income - 126.79 22.59 13.91 14.47
Investment in Mutual Funds and 61.11 -20.31 -18.92 -57.63 161.58
Equities
Profit/ (Loss) on Sale of Fixed assets 3.11 18.57 45.76 0.45 -7.23
Dividend Received 6.74 25.42 18.29 12.60 18.21
Interest Received 50.05 34.18 50.93 43.42 80.44
Other Non- Current Investments 17.99 - - - -
Net Cash Used in Investing Activities -1,608.18 -1,661.02 -5,024.00 -2,829.00 -3,261.84
......B
C. CASH FLOW FROM
FINANCING ACTIVITIES
Proceeds from Short Term Borrowings 5,212.42 2,737.11 2,030.76 782.22 2,473.00
Other Non-Current Assets -290.60 - - - -
Share Application/Allotment Money - - - 6.38 2,127.32
Received
Long term Borrowings - 178.92 1,379.78 - 29.51
Repayment of - Non-Current Liabilities -386.00 -329.86 -23.25 -344.15 -446.78
Interest and Finance Charges -1,987.65 -2,127.42 -2,116.68 -1,988.47 -1,491.24
(Gain)/Loss on Foreign Exchange 83.99 -30.83 11.93 -73.59 194.22
Fluctuations (Net)
Dividend and Dividend Tax Paid -19.04 - -339.18 -307.60 -279.17

Net Cash Generated from Financing 2,613.12 427.92 943.36 -1,925.21 2,606.85
Activities........... C
Net Increase in Cash and Cash -218.72 163.29 163.29 412.13 -239.70
Equivalents
......A+B+C
ADD: Opening Cash and Cash 1,393.30 886.63 1,411.87 999.74 1,239.44
Equivalents
Less: Bank Balances not considered as - - - 698.95 800.27
Cash and Cash equivalents
Closing Cash balance 1,174.58 1,049.92 886.63 712.92 199.47
CASHFLOW FROM OPERATING ACTIVITIES

A statement of cash flows, which details the source of funds and how they were used for ongoing commercial
operations over a specific time period, includes cash flow from operational activities. This typically comprises
working capital, revisions to net income, and changes in net income from the income statement.
Figure: 11 Graph depicting the operating cash flow for the years 2017–18 through 2021–22.
Cash from operating activities

6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
0.00
2017-18 2018-19 2019-20 2020-21 2021-22
-1,000.00
-2,000.00
-3,000.00
Cash from operating activities
Interpretation
The cash flow from operational operations indicates a significant rate of cash flow volatility in the
preceding figure. The cash from operational operations was high in the year 2018–19 at Rs. 5,166.34 lakhs, but
it decreased to Rs. 1,396.39 in the next year, showing a decline to Rs. – 1,223.66 in the following year, 2021–
22.
CASHFLOW FROM INVESTING ACTIVITIES

The items in the statement of cash flows that show changes in the amount invested in capital gains,
such as investment gains and losses and property, plant, and equipment, are known as cash flows from investing
activities.
Cash from investment activities

0.00
-500.00 2017-18 2018-19 2019-20 2020-21 2021-22
-1,000.00
-1,500.00
-2,000.00
-2,500.00
-3,000.00
-3,500.00
-4,000.00
-4,500.00
-5,000.00
Cash from investment activities
Figure: 12 Graph depicting the cash from investing operations from the 2017–18 through the 2021–22
fiscal years.
Interpretation
The cash flow from investing activities in the preceding figure demonstrates a high rate of investment in
fixed assets. It can be seen that the amount of cash from investing activities in the year 2019–20 was Rs –
5,024.00 lakhs, but that amount reduced in the next year to Rs – 1,661.02 and then to Rs – 1,608.18 in the
following year, indicating that the fixed asset investment criterion had declined.
CASHFLOW FROM FINANCING ACTIVITIES

Figure: 13 A graph displaying the financial activity cash flow from 2017–18 to 2021–2022.
Cash from financial activities

3,000.00
2,500.00
2,000.00
1,500.00
1,000.00
500.00
0.00
-500.00 2017-18 2020-21 2019-20 2020-21 2021-22
-1,000.00
-1,500.00
-2,000.00
-2,500.00
Cash from financial activities
Interpretation no 122-152.
As can be seen from the above chart, the company's
cash and bank balance have changed throughout the
years. In 2021–2022, it reached a high of Rs.
2,613.12 and a low of Rs. 427.92.
VI. CONCLUSION
Salzer Electronics Ltd. performed the cash
management effectiveness analysis for this project.
Using information from Salzer Electronics' annual
report, we examined the efficacy of liquidity. By
examining the connection between cash flow and
the balance of sales, investments, and financing
activities, the efficacy of Salzer Electronics' cash
management was examined.
Ineffective liquidity management might harm
business because cash management cannot regulate
cash flow. Poor cash management is typically to
blame for a company's downfall. The organisation
must consequently practise effective cash
management.
The research of this project reveals notable variations
in the clients' long-term credit. Sales volume has
grown, and collections management has gotten better,
according to the report. Effective receivables
management may result in a predictable sales cycle,
strong cash flow, and high revenue growth.
REFERENCE
[1]. Davidson et al, 1999 “The study of cash
requirement process, The journal of financial
management”. Vol 3(2). Pg,25-56.
[2]. Davidson et al, 1999, “The study of cash
receivables management of the financial
review”. The journal of cash management
techniques, vol,2(1). Pg, 238-298.
[3]. Pandey, 2007 “Cash shortage and cash
management facilities” in the journal of
financial management. vol 5(4). Pg,52-86.
[4]. Hampton, 2001, “Investment decision
making practices of financial management”.
Journal vol,4, pg. no25-65.
[5]. Waltson and Head (2007). “Funds
transferable technique of financial
management accounting, vol 6, pg.no 266-
358.
[6]. Zimmerer et al (2008). “Cash management
process forecasting journal of financial
management. Vol 2(1),pg. no 558-655.
[7]. Zimmerer et al, 1995. “Investment decision
making methodology” vol 5, pg. no266- 351.
[8]. Jeffrey P. Davidson et al, 1992. “Cash
management techniques in corporate business
in journal of financial management” vol 3, pg.

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International Journal of Humanities Social Science and Management (IJHSSM)

Volume 3, Issue 2, Mar.-Apr. 2023, pp: 973-986 www.ijhssm.org

A Study on Cash Management at Salzer Electronics

ABSTRACT an industry for highly qualified graduates. since the

LIMITATION OF RESEARCH services or goods should lead to this as the desired

CASH RATIO = CASH/CURRENT LIABILITY*100

Year Cash Current Liability Cash Ratio

2017-18 199.47 23,655.68 0.84%

2018-19 712.92 25398.64 2.81%

2019-20 221.82 26,052.43 2.80%

2020-21 493.33 30790.73 1.60%

2021-22 190.21 36153.51 0.53%

Analysis and Inference

CASH TO WORKING CAPITAL

TABLE SHOWING CASH TO WORKING CAPITAL

Year Cash Working Capital Ratio

2017-18 199.47 9,103.99 0.02%

2018-19 712.92 9,570.46 0.07%

2019-20 221.82 9,189.13 0.02%

2020-21 493.33 10618.34 0.05%

2021-22 190.21 13629.69 0.01%

Cash to Working Capital

Analysis and Inference

Cash to Working Capital Ratio

Cash to Working Capital Ratio

Debt Equity Ratio

Debt Equity Ratio = Total Liabilities / Shareholders Funds

Table showing Debt Equity Ratio

Year Total Liabilities Shareholders’ Debt Equity Ratio

2017-18 53,723.18 27,060.09 1.98%

2018-19 56,556.38 28,699.45 1.97%

2019-20 60675.70 30,937.99 1.96%

2020-21 67422.57 33,128.65 2.03%

2021-22 75233.24 35,838.03 2.10%

Debt equity ratio

Debt equity ratio

Analysis and Inference

Growth of Cash Position

Table Showing Growth of Cash Position

2017-18 199.47 100

2018-19 712.92 357.41

2019-20 221.82 111.20

2020-21 493.33 247.32

2021-22 190.21 95.36

Growth of Cash position

Growth of Cash position

Analysis and Inference

CASH TO CURRENT ASSETS

Table showing Cash to Current Assets

2017-18 199.47 32,759.67 0.61%

2018-19 712.92 34,969.10 2.04%

2019-20 221.82 35,241.56 0.63%

2020-21 493.33 41,409.07 1.19%

2021-22 190.21 49,783.20 0.38%

Analysis and Inference

Cash to current asset Ratio

Cash to current asset Ratio

NET PROFIT RATIO

Table showing Net sales to Net profit ratio

Year Net Profit After Net Sales Net Profit Ratio

2017-18 2,001.65 45,333.17 4.41%

2018-19 2,395.74 55,976.62 4.28%

2019-20 2,638.66 56,694.56 4.65%